Asia Economic Institute et al v. Xcentric Ventures LLC et al, No. 2:2010cv01360 - Document 94 (C.D. Cal. 2010)

Court Description: ORDER GRANTING IN PART DEFENDANTS MOTION FOR SUMMARY JUDGMENT AS TO THE RICO CLAIMS TO THE EXTENT THOSE CLAIMS ARE BASED ON PREDICATE ACTS OF EXTORTION 40 ; DENYING PLAINTIFFS' EX PARTE APPLICATION FOR A CONTINUANCE OF THE SUMMARY JUDGMENT MOTION UNDER RULE 56(f) 87 ; GRANTING DEFENDANTS' MOTION TO DISMISS PLAINTIFFS' COMPLAINT AS TO THE RICO CLAIMS BASED ON PREDICATE ACTS OF WIRE FRAUD; AND GRANTING PLAINTIFFS' MOTION FOR A BENCH TRIAL 50 by Judge Stephen V. Wilson. See Attached Order. (rs) (Entered: 07/19/2010)

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Asia Economic Institute et al v. Xcentric Ventures LLC et al Doc. 94 1 2 3 4 5 6 7 UNITED STATES DISTRICT COURT 8 CENTRAL DISTRICT OF CALIFORNIA 9 10 11 12 13 ASIA ECONOMIC INSTITUTE, a California limited liability company, RAYMOND MOBREZ, an individual, and ILIANA LLANERAS, an individual, Plaintiffs, 14 v. 15 16 17 18 19 20 21 XCENTRIC VENTURES, LLC, an Arizona limited liability company, d/b/a/ as BADBUSINESS BUREAU and/or BADBUSINESSBUREAU.COM, and/or RIP OFF REPORT and/or RIPOFF REPORT.COM; BAD BUSINESS BUREAU, LLC, organized and existing under the laws of St. Kitts/Nevis, West Indies; EDWARD MAGEDSON, an individual, and DOES 1 through 100, inclusive, 22 ) ) ) ) ) ) ) ) ) ) CV 10-1360 SVW (PJWx) ORDER GRANTING IN PART DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT AS TO THE RICO CLAIMS TO THE EXTENT THOSE CLAIMS ARE BASED ON PREDICATE ACTS OF EXTORTION [40]; DENYING PLAINTIFFS' EX PARTE APPLICATION FOR A CONTINUANCE OF THE SUMMARY JUDGMENT MOTION UNDER RULE 56(f) [87]; GRANTING DEFENDANTS' MOTION TO DISMISS PLAINTIFFS' COMPLAINT AS TO THE RICO CLAIMS BASED ON PREDICATE ACTS OF WIRE FRAUD; AND GRANTING PLAINTIFFS' MOTION FOR A BENCH TRIAL [50] Defendants. 23 24 25 26 27 28 I. INTRODUCTION AND PROCEDURAL BACKGROUND Plaintiffs Asia Economic Institute, LLC (“AEI”) and its principals, Raymond Mobrez and Iliana Llaneras (collectively, “Plaintiffs” or “AEI”) brought this action on January 27, 2010. The Dockets.Justia.com 1 case was removed to this Court in February 2010 on the grounds of both 2 federal question and diversity jurisdiction. 3 allege that Defendants Xcentric Ventures, LLC (“Xcentric”), Bad 4 Business Bureau, LLC, and Edward Magedson (collectively “Defendants”) 5 own and operate a website at www.RipoffReport.com (“Ripoff Report”) and 6 that defamatory comments regarding AEI and its principals were posted 7 on the website. 8 arising out of these allegedly defamatory posts (and Defendants’ 9 conduct related thereto) including defamation, unfair business Plaintiffs generally Plaintiffs assert several claims against Defendants 10 practices, intentional and negligent interference with prospective 11 economic advantage, and violation of the Racketeer Influenced and 12 Corrupt Organizations Act (“RICO”). 13 On April 19, 2010, the Court held an initial case status 14 conference at which both parties appeared and were represented by 15 counsel. 16 Plaintiffs’ third and fourth causes of action under the RICO statute, 17 18 U.S.C. § 1962(c), and 1962(d), to the extent that those claims are 18 based on the predicate acts of extortion, and ruled that those claims 19 would be tried first. 20 The Court also ruled that the issue of damages would be bifurcated; 21 thus, the August 3, 2010 trial would only address Defendants’ liability 22 under the RICO statute. 23 a motion before Magistrate Judge Walsh to bifurcate discovery so as to 24 limit discovery prior to August 3, 2010 to the RICO/extortion claims 25 only. 26 (Order, Docket No. 82.) The Court instructed the parties that it was bifurcating The Court set a trial date for August 3, 2010. Consistent with this ruling, Plaintiffs made Magistrate Judge Walsh granted the motion on June 24, 2010. 27 28 2 1 On May 24, 2010, Defendants filed a Motion for Summary Judgment as 2 to Plaintiffs’ entire case. 3 filed an ex parte application for a continuance of the summary judgment 4 motion so as to conduct further discovery under Federal Rule of Civil 5 Procedure 56(f). 6 Plaintiffs opposed the motion and also On May 31, 2010, Plaintiffs filed a Motion to Enforce Defendants’ 7 Waiver of a Jury Trial and for a Bench Trial. 8 oppose the motion. Defendants did not 9 The motions came before the Court for a hearing on July 12, 2010. 10 Additionally, at the July 12, 2010 hearing, the Court raised the issue 11 of whether the Plaintiffs' Complaint was sufficient to state a 12 plausible claim for RICO violations based on the alleged predicate acts 13 of wire fraud. 14 sufficient, and made an oral motion to dismiss those claims for failure 15 to plead the alleged acts of wire fraud with particularity. 16 Defendants' argued that the Complaint was not Having read and considered the parties' briefing, the evidence 17 submitted therewith, and the parties' oral arguments, and for the 18 reasons stated below, Plaintiffs' Ex Parte Request for a Continuance of 19 the Motion for Summary Judgment under Rule 56(f) is DENIED. 20 Defendants' Motion for Summary Judgment is GRANTED IN PART as to the 21 third and fourth causes of action under RICO, to the extent those 22 claims are based on the alleged predicate acts of extortion or 23 attempted extortion. 24 and fourth causes of action under RICO, to the extent those claims are 25 based on alleged acts of wire fraud, is GRANTED WITH LEAVE TO AMEND. 26 Plaintiffs' Motion for a Bench Trial is GRANTED. Defendants’ Motion to Dismiss Plaintiffs’ third 27 28 3 1 II. 2 FACTUAL BACKGROUND The following material facts are undisputed unless otherwise 3 noted. 4 only the issue of whether Defendants are liable under the RICO statute 5 based on predicate acts of extortion, the Court has not considered 6 Defendants’ arguments regarding Plaintiffs’ state law claims or 7 regarding Plaintiffs’ alleged damages (or lack thereof). 8 will only address facts that are relevant to the RICO/extortion1 claims. 9 As the Court has bifurcated this case so as to first resolve A. 10 The Court Asia Economic Institute (“AEI”) Plaintiff Asia Economic Institute (“AEI”) was formed sometime in 11 2000 and conducted business in California for nine years. 12 Statement of Undisputed Facts [hereinafter “DSUF”] 4-5.) 13 and operated by its principals, Plaintiffs Raymond Mobrez and his wife 14 Iliana Llaneras. 15 non-governmental publication of current news and events. 16 of Raymond Mobrez, dated May 3, 2010, ¶ 2.) 17 this lawsuit, AEI was planning to produce seminars and conferences, and 18 was considering selling memberships to some of those programs. 19 (Plaintiffs’ Statement of Genuine Issues [hereinafter “PSGI”] 6, 8.) 20 However, AEI never actually produced any seminars. 21 its nine years in operation, AEI’s total revenues were $0 and its 22 profits were $0. 23 2009. (DSUF 3.) (DSUF 9.) (Defs. AEI is owned The company operated as a free, on-line, (Declaration At the times relevant to (DSUF 8.) During AEI ceased all business operations in June (DSUF 10.) 24 25 B. Xcentric and www.RipoffReport.com 26 1 27 28 When the Court refers to the "RICO/extortion" claims, the Court is referring to Plaintiffs' third and fourth causes of action under the RICO statute, to the extent that those alleged violations are based on the alleged predicate acts of extortion or attempted extortion. 4 1 Defendant Xcentric Ventures, LLC (“Xcentric”) operates the website 2 www.RipoffReport.com (“Ripoff Report”), which started in 1998. 3 1-2.) 4 manager of Xcentric and the “ED”itor of the website. 5 website is a consumer reporting website where third party consumers can 6 document complaints about companies or individuals. 7 Magedson contends that the Ripoff Report is the leading complaint 8 reporting website on the Internet. 9 2010, ¶ 2.) (DSUF Defendant Edward Magedson (“Magedson”) is the founder and (DSUF 2.) The (PSGI 1.) (Magedson Decl., dated May 24, The posting service is free to use – the Ripoff Report 10 does not charge anything to users who create reports, viewers who read 11 reports, or persons who post comments or rebuttals to the reports. 12 (Id. ¶ 4.) 13 If an author wants to submit a report on the Ripoff Report 14 website, they must first create a free user account. 15 4.) 16 and other information, all of which may be falsified. 17 is then required to provide an email address, which the server 18 automatically confirms by sending an email to that address prior to 19 allowing the user to post anything. 20 are guided through a five step process. 21 must input certain information about the company they are reporting, 22 including the name, address, and phone number. 23 the user is asked to create a “report title” by filing out a series of 24 four blank boxes into which the user can enter (a) the company name; 25 (b) words explaining what the report is about; (c) the city where the 26 company is located, and (d) the state where the company is located. (Smith Decl. ¶ The user is required to provide their name, address, phone number, (Id.) 27 28 5 (Id.) The user To draft a report, users (PSGI 3.) In Step 1, the user (PSGI 4.) In Step 2, 1 (Smith Decl. ¶ 6.)2 2 category for the report from a list of more then 500 available choices 3 – such as “Dining” or “Court Judges.” 4 presented with a blank box where they can add the text of the report. 5 Other than generic style guidelines, such as “DO NOT use ALL CAPITAL 6 LETTERS,” the page does not encourage, solicit, or instruct users to 7 say anything in particular. 8 photos or images to their report if they wish. 9 Step 5, users are asked to review the Terms of Service, which require 10 the users to (among other things) refrain from posting anything false 11 or defamatory. 12 affirm that their reports are valid and to check a box indicating as 13 much. 14 The user is also asked to select a topic and (Id. ¶ 10.) (Id. ¶ 7.) (Id. ¶ 8.) In Step 3, users are Step 4 allows users to attach (Id. ¶ 9.) Finally, in Users are also required to review and Every user-generated submission to the Ripoff Report website is 15 reviewed by a staff of monitors who are authorized to make minor 16 editorial changes to redact certain types of content – e.g., offensive 17 language, social security numbers, bank account numbers, profanity, 18 threats. 19 any other changes to the reports. 20 reviewed by the staff it is posted to the website using a standard (Id. ¶ 11.) Ripoff Report staff is not authorized to make (Id.)3 After a report has been 21 2 22 23 24 25 26 27 28 Plaintiffs attempt to dispute the facts noted in the previous two sentences, but Plaintiffs’ arguments indicate that there is no actual dispute; Plaintiffs are simply quibbling over phrasing. For example, Plaintiffs state that these facts are disputed because: “[Users] are required to disclose certain information regarding an individual or company at the Web site’s direction.” (PSGI 69.) The Court sees no meaningful distinction between Plaintiffs’ qualifications and the information contained in the Declaration of Ben Smith, upon which Defendants rely for these facts. Thus, the Court accepts these facts as undisputed. 3 Plaintiffs dispute this fact and assert that the Defendants also add the term “Ripoff Report” to the text supplied by the author for the title of the report. (PSGI 80.) In support of this fact, however, Plaintiffs cite an answer filed by Defendants in a separate case, Certain Approval Programs, LLC v. Xcentric Ventures, Case No. CV 08-1608-PHX-MHB, in 2008. While this Answer indicates Defendants' practices in 2008, Plaintiffs do not offer any evidence that Defendants added the term "Ripoff Report" to user-generated reports at the times relevant to this action. 6 1 format. 2 report may do so by posting a comment or a rebuttal for free at any 3 time. 4 rebuttal is that the user must create a free account with the Ripoff 5 Report website. 6 (Id. ¶ 12 and Exh. F.) (Id. ¶ 13; PSGI 20-21.) Anyone who wishes to respond to the The only requirement for posting a (Id. ¶ 13.) Finally, when a report is submitted to the Ripoff Report website, 7 Xcentric’s servers automatically combine the unique text supplied by 8 the author with various HTML code that is generic to every page on the 9 website. (Id. ¶ 14.) During this process, and using keywords supplied 10 by the author in the text of the report (such as the name of the 11 company being reported), Xcentric’s servers automatically create “meta 12 tags,” which are used by search engines such as Google and Yahoo to 13 index the contents of the specific page at issue. 14 servers also automatically include three different keywords – rip-off, 15 ripoff, rip off – into the meta tags of every page on the website. 16 (Id. ¶ 15.) 17 particular report; they are simply indexing references used by search 18 engines in order to accurately reflect the source of the indexed page. 19 (Id. ¶ 15.) 20 choose to view the actual HTML code for a report’s webpage can view the 21 meta tags that are used for indexing purposes. (Id.) Xcentric’s The meta tags are not visible in the title or body of any However, individuals with basic technical knowledge who (Id. ¶ 14.) 22 C. 23 When a user posts a negative report on the Ripoff Report website, Ripoff Report’s Corporate Advocacy Program 24 the subject of the complaint has various options for addressing the 25 negative report. 26 comment to the third-party report explaining his or her side of the 27 story. First, the subject may post a free “rebuttal” or (PSGI 20-21.) Second, a company or individual can deal with 28 7 1 negative reports by joining Ripoff Report’s Corporate Advocacy Program 2 (“CAP”). 3 program as follows: “The goal of the program is to ensure that 4 complaints submitted by unhappy customers are resolved and that the 5 root problems which caused these complaints are fixed so that future 6 complaints can be reduced or avoided.” 7 2010, ¶ 9.) 8 in writing that it will work with the Ripoff Report and the 9 complainants to resolve the complaints. (See PSGI 23.) Magedson describes the purpose of the CAP (Magedson Decl., dated May 24, A company who joins the CAP program is required to agree (Id. ¶¶ 10, 15.) As a 10 condition of joining the CAP program, the company is required to accept 11 some level of responsibility for customer complaints even if it does 12 not agree with them. 13 (Id.) Once a company joins CAP, Ripoff Report agrees to act as a liaison 14 between the CAP member and the persons who posted negative reports 15 about the CAP member on the website. 16 an email that was drafted with the CAP member’s input to each author 17 who has submitted a report about that CAP member. 18 Decl., Exh. M.) 19 program and has made a commitment to resolve the customer’s complaint 20 quickly and fairly. 21 a message at the top of every complaint posted about the CAP member on 22 the website, explaining that the member has joined the CAP program and 23 is committed to increasing customer satisfaction and working with 24 Ripoff Report to resolve past and future complaints. 25 Decl., Exh. M.) 26 members in the CAP program will be permitted to “provide your side of (Id. ¶ 11.) Ripoff Report sends (Id.; see Mobrez The email explains that the CAP member has joined the (Magedson Decl. ¶ 11.) Ripoff Report also posts (Id. ¶ 12; Mobrez Finally, the Ripoff Report website states that 27 28 8 1 the story and link to your own website, where you may post your 2 commitment.” (Mobrez Decl., Exh. M.) 3 Membership in the CAP program never includes the removal of 4 reports, nor does Ripoff Report change the text of the user-submitted 5 reports for CAP members. 6 to the reports is to add an introduction to each report explaining that 7 the company has joined the program. 8 Ripoff Report has ever removed a report from its website in exchange 9 for money, nor is there any evidence that Defendants promised to do so. 10 (Magedson Decl. ¶ 13.) (Id.) The only alteration There is no evidence that It is undisputed that membership in the CAP program requires the 11 payment of an initial flat fee of $7,500, as well as a monthly fee. 12 (PSGI 29; Xcentric Depo. at 40.) 13 how the monthly fee is calculated. 14 of a page on the Ripoff Report website, which describes the CAP program 15 in some detail and states that the monthly fees are based “upon the 16 number of Reports filed, the number of offices you have, and/or the 17 size of an average sale.” 18 however, that this statement on the website is in error and that the 19 only method he has ever used to calculate the monthly fee for the CAP 20 program is the number of complaints filed regarding the CAP member. 21 (Magedson Decl., dated June 23, 2010, ¶ 4-6; Magedson Depo. at 101, 22 attached as Exhibit 7 to Borodkin Decl.). 23 24 However, there is some dispute as to Plaintiffs have submitted evidence (Mobrez Decl., Exh. M.) Magedson testified, It is undisputed that Plaintiff AEI never joined the CAP program and never paid any money to Defendants. (DSUF 46.) 25 D. 26 On or about February 2009, Plaintiffs Mobrez and Llaneras 27 Reports About AEI conducted a search on Google.com for Internet sources referring to the 28 9 1 terms “Raymond Mobrez,” “Mobrez,” “Iliana Llaneras,” “Llaneras,” and 2 “AEI.” 3 that time, Plaintiffs discovered that there were four reports about 4 AEI, Mobrez, and/or Llaneras posted on the Ripoff Report website. 5 (Id.) 6 Defendants’ website. 7 February 2010, after this action was filed. 8 24, 2010, ¶ 59.) (Mobrez Decl., dated March 29, 2010, ¶ 3 [Docket No. 11].) At To date, there are six reports regarding Plaintiffs on (Id. ¶ 4.) Two of the reports were filed in (Magedson Decl., dated May 9 Generally, the reports written about Plaintiffs purport to be 10 written by former employees of AEI and state that AEI is a bad place to 11 work. 12 Among other things, the reports state the following: “They reduce pay 13 illegally;” “Complete disorganization;” “[T]hey have no idea to [sic] 14 run any business and just continue to ruin people’s lives . . .;” 15 “[O]nce you start working, nothing ever gets done. . . . There are a 16 couple of theories that could explain this paradox. 17 are laundering money . . .;” “They treat their employees like dirt;” 18 “Asia Economic Institute it’s a SCAM;” and “They routinely ignore 19 employment laws.” 20 Mobrez’s stated credentials are accurate and state that Mobrez hires 21 and fires on the basis of race, religion and gender. 22 innocuous comments include that Mobrez and Llaneras are “boring,” 23 “crazy,” and “secretly married.” 24 (See DSUF 12-18; Mobrez Depo., Exhs. 1A, 2A, 3A, 4A, 5A, 6A.) (Id.) The reports also call into question whether Other more The six reports about Plaintiffs were created by third parties, not by Defendants Magedson or Xcentric.4 26 4 28 (Id.) (Id.) 25 27 One is that they (DSUF 63; Magedson Decl., Plaintiffs dispute this fact by stating that: “Defendants have not yet disclosed the identity of the posters. Discovery is ongoing and Plaintiffs have a pending motion to compel discovery and a motion to bifurcate discovery.” (PSGI 64.) This does not create a genuine dispute of fact as to the authors of the reports. First, the Plaintiffs’ motion to compel only 10 1 dated May 24, 2010, ¶ 60; see Mobrez Depo. at 98:5-99:5, 107:22-108:17; 2 Craven Decl. ¶ 7; Thompson Decl. ¶ 7; Jordan Decl. ¶ 7.) 3 reports were posted on the site, each report was reviewed by one of 4 Xcentric’s staff of content monitors. 5 servers automatically create a log showing the identity of each content 6 monitor who reviewed the reports about AEI before they were posted. 7 (DSUF 66.) 8 2009, and February 19, 2010 were reviewed by Amy Thompson. 9 Decl. ¶ 6; Smith Decl. ¶ 17.) (DSUF 65.) Before the Ripoff Report’s The reports that were posted on January 28, 2009, June 1, (Thompson The report posted on February 13, 2009 10 was reviewed by Kim Jordan. 11 report posted on September 30, 2009 and February 3, 2010 were reviewed 12 by Linda Craven. 13 witnesses have submitted declarations stating that they did not create 14 or alter any part of these reports about AEI. 15 Thompson Decl. ¶ 7; Jordan Decl. ¶ 7.) (Jordan Decl. ¶ 6; Smith Decl. ¶ 17.) (Craven Decl. ¶ 6; Smith Decl. ¶ 17.) The All three (Craven Decl. ¶ 7; 16 E. 17 When Plaintiffs first learned about the reports concerning AEI on Communications Between the Parties Regarding the AEI Reports5 18 the Ripoff Report website, Plaintiff Mobrez sent an email to the 19 address for Ripoff Report, info@ripoffreport.com, on February 15, 2009. 20 (Mobrez Decl.6 ¶ 4, Exh. A.) 21 22 23 24 25 26 27 28 The email stated that Mobrez was aware of sought a continuation of the Magedson Deposition; it did not relate in any way to a request for information about the authors of the reports. As far as the Court can tell, Plaintiffs had not made a discovery request for information regarding the authors of the reports prior to the filing of their Opposition. Further, Defendants have declared that they did not create the reports, and Plaintiffs have not come forward with any evidence rebutting that assertion. Thus, the Court accepts as undisputed the testimony of Magedson, Craven, Thompson, and Jordan that they did not create the reports at issue. 5 The Court has not considered the electronic recordings of the communications between Defendant Magedson and Plaintiff Mobrez, for the reasons stated below. Thus, the Court summarizes the facts contained in the declarations of Magedson, Mobrez, and Llaneras, including the corrected declarations filed on May 20, 2010. 6 For purposes of this section, “Mobrez Declaration” refers to the original Declaration of Raymond Mobrez filed on May 3, 2010 detailing his contact with Defendants. “Corrected Mobrez Declaration” refers to the Declaration of Raymond Mobrez filed on May 20, 2010 detailing his contacts with Defendants. 11 1 some of the reports about himself and AEI on the Ripoff Report website, 2 that the reports were false, “defamatory and libelous,” and that the 3 recipient of the email needed to “immediately remove these derogatory 4 remarks.” 5 contact information of the individual(s) who posted the report(s) on 6 the website. 7 Magedson Decl., dated May 24, 2010, ¶ 20.) 8 posted a free rebuttal to each of the reports concerning AEI, Mobrez, 9 and Llaneras on the Ripoff Report website. 10 (Id., Exh. A.) (Id.) The email also requested the names and Defendants did not respond. (Mobrez Decl. ¶ 4; On April 3, 2009, AEI (Mobrez Decl. ¶ 5, Exh. B.) On April 27, 2009, Mobrez placed three separate calls to the main 11 telephone number listed on the Ripoff Report website. 12 Mobrez does not recall specifically what was said on the calls. 13 (Corrected Mobrez Decl. ¶ 2-4.) 14 (DSUF 24.) The next day, on April 28, 2009, Mobrez sent an email to the email 15 address EDitor@ripoffreport.com. 16 stated that Mobrez had spoken with someone at the Ripoff Report the 17 previous day who had asked Mobrez to explain who he was and why he was 18 calling. 19 reports about AEI were posted on the Ripoff Report website. 20 asked the email recipient: “How can you assist us in removing these 21 bogus posts from your website?” 22 receiving this email. 23 (Mobrez Decl. Exh. D.) The email The email then explained that Mobrez was emailing because (Id.) Mobrez Magedson does not recall ever (Magedson Decl., dated May 24, 2010, ¶ 22.) On May 5, 2009, Mobrez again contacted the Ripoff Report by phone 24 and spoke to someone who identified himself as Ed Magedson. 25 Decl. ¶ 10; see Magedson Decl. ¶ 11.) 26 specifically was said during that conversation. 27 Decl. ¶ 2-4.) (Mobrez Mobrez does not recall what (Mobrez Corrected After the conversation, on May 5, 2009, Mobrez re-sent 28 12 1 his April 28, 2009 email to Magedson at EDitor@ripoffreport.com. 2 (Mobrez Decl. ¶ 11, Exh. F.) 3 (Magedson Decl., dated May 24, 2010, ¶ 22.) 4 Magedson recalls receiving this email. On the same day, May 5, 2009, Magedson responded to Mobrez’s email 5 with a lengthy form email, which he normally sends to people who email 6 Magedson asking about their options for responding to a report. 7 Mobrez Decl., Exh. G.) 8 Exh. G.) 9 not verify or investigate the truth of complaints posted on its website The form email spans six pages. (Id.; (Mobrez Decl., Among other things, the email states that Ripoff Report does 10 and encourages the subjects of reports to file a free rebuttal to any 11 reports. 12 are thinking of suing the Ripoff Report. 13 of you who threaten to sue, be prepared to go the long haul, and when 14 you want to do a walk away because you realize you cannot and will not 15 win because you filed a frivolous law suit, 16 for our legal bill and in some cases and then some, before we will let 17 you out of the case.” 18 get you more publicity and additional listings on search engines . . . 19 Why do we win? – just do a Google search for Communications Decency 20 Act.” 21 Report never removes reports from the website, and that it will not do 22 so for any amount of money. 23 allows the authors of the reports to update their report with positive 24 or negative information, but the reports are never removed. 25 (Id.) (Id.) The email also includes a warning to those persons who (Id.) The email states: “To those . . . you will be paying The email goes on, “Suing us will only The email also emphasizes several times that Ripoff (Id.) The email states that the website (Id.) The May 5, 2009 email also contains some limited information about 26 the Ripoff Report’s Corporate Advocacy Program (“CAP”). 27 email states that the CAP program: (1) “changes the negative listings 28 13 (Id.) The 1 on search engines into a positive along with all the Reports on the 2 Ripoff Report . . . (Reports are never deleted)”; (2) “allows [the 3 Ripoff Report] to email everyone who file[d] a complaint that the 4 business has contacted Ripoff Report and wants to make things right”; 5 and (3) “this . . . is later Reported in our findings about your 6 company we post to every Report about your business.” 7 5, 2009 email also contains a link to the “intake form” for the CAP 8 program, and also includes a link to a page on the website with more 9 information about the CAP program. 10 (Id.) The May (Mobrez Corrected Decl., Exh. M.) The May 5, 2009 email does not contain any demand for money or 11 even any reference to fees for the Corporate Advocacy Program. 12 Decl., Exh. G.) 13 report from the website in exchange for money – in fact, it expressly 14 disavows doing so. 15 that joining the CAP will result in future reports being blocked from 16 the website. 17 (Mobrez The email does not contain any promise to take down a Similarly, the email does not contain any promise (Id.) The webpage to which the May 5, 2009 email provides a link (Mobrez 18 Corrected Decl., Exh. M) describes the CAP program in broad terms. 19 example, it indicates that membership in the program will authorize the 20 Ripoff Report to contact the authors of reports to try and facilitate a 21 resolution, and that CAP members authorize the Ripoff Report to include 22 a positive message at to the top of each report about the CAP member. 23 (Id.) 24 requires the payment of an initial flat fee and monthly payments, but 25 does not state the amount of such fees. 26 27 For The webpage also states that membership in the CAP program (Id.) After receiving the May 5, 2009 email, Mobrez again spoke to Magedson by phone. (Mobrez Decl. ¶ 13; Magedson Decl., dated May 24, 28 14 1 2010, ¶ 14.) 2 phone call. 3 Mobrez does not recall specifically what was said on this (Mobrez Corrected Decl. ¶¶ 2-4.) On May 12, 2009, Mobrez again contacted Magedson by telephone. 4 (Mobrez Decl. ¶ 14; Magedson Decl., dated May 24, 2010, ¶ 30.) 5 was the final telephone conversation between the parties. 6 Mobrez does not recall specifically what was said during this phone 7 call. 8 Mobrez that he needed to receive an email with Mobrez’s CAP application 9 form before Magedson could engage in any further discussions with him. (Mobrez Corrected Decl. ¶¶ 2-4.) This (Id.) Magedson recalls that he told 10 (Magedson Decl., dated May 24, 2010, ¶ 30.) 11 Mobrez told him that he had already sent an email to Magedson, which 12 Magedson understood as meaning that Mobrez had completed the CAP 13 application form. 14 completed CAP application form filled out by Mobrez, but could not find 15 one. 16 Mobrez stating that Mobrez “drove him crazy” because Magedson spent so 17 much time looking for a form Mobrez never filled out. 18 (Id. ¶ 32.) (Id.). Magedson recalls that After this phone call, Magedson looked for a Thus, later that day, Magedson sent an email to (Id.) On July 24, 2009, Mobrez and Magedson had two final email 19 conversations. 20 that the reports about AEI, Mobrez, and Llaneras on the Ripoff Report 21 website were false and easily disproved. 22 Mobrez stated that he could not fill out the CAP application form 23 because it would require AEI to stipulate to things it had not done, 24 things which were “flagrant untruths.” 25 he ever came to Los Angeles so that the two of them could meet in 26 person. 27 Decl., Exh. K.) (Id.) First, Mobrez emailed Magedson and told him once again (Mobrez Decl., Exh. J.) (Id.) Mobrez asked Magedson if Magedson responded by email the same day. (Mobrez Magedson stated that there was no sense in meeting and 28 15 1 that, “I want to help you, but there is nothing we can do.” 2 stated: “We do not remove reports. 3 legal fees – never lost a case – people know. 4 REPORTS. . . . No amount of money can change this.” 5 parties did not speak again prior to the filing of this lawsuit. 6 Magedson We’ve spent over 3.4 million in We DO NOT REMOVE (Id.) The Magedson contends that he had a total of four telephone 7 conversations with Mobrez in April and May of 2009, all of which were 8 initiated by Mobrez. 9 Magedson declares that he never called Mobrez. (Magedson Decl., dated May 11, 2010, ¶ 14.) (Id.) Magedson 10 declares that, during these telephone conversations, he never asked 11 Mobrez for money, never asked him if his company was profitable or how 12 it made money, never told him that the payment of a fee to Xcentric 13 would result in negative information being changed into a positive, and 14 never told Mobrez that a lawsuit against Ripoff Report was likely to 15 fail. 16 of these four phone calls.7 17 general policy, he never discusses the CAP program over the phone with 18 anyone unless they have already contacted the Ripoff Report in writing 19 to apply for the program, which Mobrez never did. 20 (Id.) Plaintiffs offer no evidence to rebut Magedson’s account Finally, Magedson declares that, as a (Id. ¶ 16.) As stated above, Mobrez admits that he does not accurately recall 21 what was said in the phone conversations with Magedson in April and May 22 2009 and that he had “confused some of what was said in my telephone 23 conversations with what was written in the e-mail correspondence 24 between myself and Mr. Magedson.” 25 Mobrez declares that “[t]here were a number of calls made by me to 26 27 28 (Mobrez Corrected Decl. ¶¶ 2-4.) 7 Initially both Mobrez and Llaneras filed Declarations on May 3, 2010 in which they described the April and May 2009 phone conversations between Magedson and Mobrez. The Plaintiffs’ descriptions of those calls differed significantly from Magedson’s account. However, on May 20, 2010, both Plaintiffs filed amended declarations and testified that their previous accounts of the phone calls were inaccurate. 16 1 Ripoff Report. 2 me from Ripoff Report.” 3 specifically recalls “a telephone conversation with someone who 4 mentioned ‘five grand’ as the cost for joining the Corporate Advocacy 5 Program,” but does not remember the exact date or time of the call and 6 does not know who the speaker was, or if it was Magedson. 7 Finally, Plaintiff Llaneras declares that during one phone call, Mobrez 8 instructed her to listen in on another receiver and she heard Mobrez 9 discussing money with someone she could not identify. In addition, there were a number of incoming calls to (Id. ¶ 2.) 10 Corrected Declaration ¶ 4.) 11 III. MOTION FOR SUMMARY JUDGMENT Mobrez declares that he (Id. ¶ 5.) (Llaneras 12 A. 13 As a preliminary matter, the Court notes that it has only Scope of the Motion 14 considered those arguments in Defendants’ summary judgment motion 15 related to Defendants’ liability under the RICO statutes based on the 16 alleged predicate acts of extortion. 17 summary judgment as to Plaintiffs’ entire case, such a motion was 18 inappropriate given the Court’s prior Order bifurcating the 19 RICO/extortion claims from the remaining claims and from the issue of 20 damages. Although Defendants moved for 21 B. 22 Summary judgment is appropriate when the evidence, viewed in the Legal Standard 23 light most favorable to the nonmoving party, shows that there is no 24 genuine issue as to any material fact, and that the moving party is 25 entitled to judgment as a matter of law. 26 Tarin v. County of Los Angeles, 123 F.3d 1259, 1263 (9th Cir. 1997), 27 superseded by statute on other grounds, as stated in Leisek v. 28 17 See Fed. R. Civ. P. 56(c); 1 Brightwood Corp., 278 F.3d 895, 899 n.2 (9th Cir. 2002). 2 issue of fact is one that affects the outcome of the litigation and 3 requires a trial to resolve the parties’ differing versions of the 4 truth.” 5 “A material SEC v. Seaboard Corp., 677 F.2d 1289, 1293 (9th Cir. 1982). The moving party bears the initial burden of establishing the 6 absence of a genuine issue of material fact. 7 Catrett, 477 U.S. 317, 323-24 (1986). 8 of proof at trial, it must affirmatively establish all elements of its 9 legal claim. See Celotex Corp v. If that party bears the burden Southern Cal. Gas Co. v. City of Santa Ana, 336 F.3d 885, 10 888 (9th Cir. 2003) (per curiam). 11 satisfy its Rule 56(c) burden by “‘showing’ -- that is, pointing out to 12 the district court -- that there is an absence of evidence to support 13 the nonmoving party’s case.” 14 failure of proof concerning an essential element of the nonmoving 15 party’s case necessarily renders all other facts immaterial.” 16 322. 17 Otherwise, the moving party may Celotex, 477 U.S. at 325. “[A] complete Id. at Once the moving party has met its initial burden, Rule 56(e) 18 requires the nonmoving party to go beyond the pleadings and identify 19 specific facts that show a genuine issue for trial. 20 Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). 21 demonstrate a genuine issue, the opposing party “must do more than 22 simply show that there is some metaphysical doubt as to the material 23 facts. . . . 24 facts showing that there is a genuine issue for trial.” 25 Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586-87 26 (1986). 27 or not significantly probative does not present a genuine issue of See id. at 323-34; To [T]he nonmoving party must come forward with specific Matsushita A scintilla of evidence or evidence that is merely colorable 28 18 1 material fact. 2 Cir. 2000). 3 outcome of the suit under the governing law will properly preclude the 4 entry of summary judgment. 5 Aprin v. Santa Clara Valley Transp. Agency, 261 F.3d 912, 919 (9th Cir. 6 2001) (the nonmoving party must identify specific evidence from which a 7 reasonable jury could return a verdict in its favor). 8 9 Addisu v. Fred Meyer, Inc., 198 F.3d 1130, 1134 (9th Only genuine disputes over facts that might affect the See Anderson, 477 U.S. at 248; see also When deciding whether a genuine issue of fact exists, the Court may not engage in credibility determinations or the weighing of 10 evidence; such functions are the province of the jury, not the judge. 11 Anderson, 477 U.S. at 255. 12 C. 13 In support of their Motion for Summary Judgment, Defendants seek Evidentiary Objections 14 to introduce evidence of six audio recordings which purport to be 15 recordings of the telephone calls that Mobrez made to Magedson on April 16 27, 2009 (two calls), May 5, 2009 (two calls), May 9, 2009 (one call), 17 and May 12, 2009 (one call). 18 containing audio files of the recordings].) 19 introduce these recordings to rebut the May 3, 2010 declarations that 20 Plaintiffs Mobrez and Llaneras8 filed with the Court in which they 21 recounted the substance of their telephone conversations with Magedson 22 in April and May 2009.9 (Mobrez Depo., Exh. 25 [compact disc Defendants seek to Defendants contend that the recordings prove 23 24 25 26 27 28 8 Llaneras never spoke with Magedson directly; however, she claimed in her May 3, 2010 declaration that she had listened to three calls between Mobrez and Magedson by picking up an additional phone receiver. 9 At the April 19, 2010 status conference, the Court ordered Plaintiffs Mobrez and Llaneras, as well as Defendant Magedson, to file detailed declarations indicating every conversation between Plaintiffs and Defendants that Plaintiffs believed supported their claim that Defendants engaged in attempted extortion (as a predicate act to the RICO claims.) Plaintiffs filed their declarations with the Court on May 3, 2010. Magedson filed his declaration with the Court on May 11, 2010. 19 1 that the phone conversations were nothing like what was described in 2 Plaintiffs’ declarations, and that several of the statements Plaintiffs 3 attributed to Magedson – for example, demands for money – simply never 4 occurred. 5 Mobrez’s phone records indicate that in April and May 2009, Mobrez 6 called Magedson a total of seven times. 7 21.) 8 50.) 9 party vendor hired by Xcentric to record all telephone calls to Ripoff (DSUF 46; Mobrez Depo., Exh. One of these calls, on April 27, 2009, was not recorded. (DSUF The remaining six calls were automatically recorded by a third- 10 Report’s main phone number. 11 29.) 12 telephone number were not given notice that their calls would be 13 recorded. 14 [Magedson Depo.].) 15 (Magedson Decl., dated May 24, 2010, ¶ In April and May 2009, persons calling the Ripoff Report main (Mobrez Corrected Decl. ¶ 12; Borodkin Decl. ¶ 6, Exh. 3 Magedson testified that once a call is recorded, the third party 16 vendor automatically emails Magedson an audio file which contains a 17 copy of the recorded call. 18 reviewed the audio files of every recorded call made to the Ripoff 19 Report’s main telephone number over a period of several months – a 20 total of 4,537 calls. 21 audio recordings submitted to the Court are true, complete, and 22 unaltered copies of recordings automatically created by Xcentric’s 23 third party vendor. 24 (Id. ¶ 29.) (Id. ¶ 27.) On April 20, 2010, Magedson Magedson declares that the six (Id. ¶¶ 25, 29.) Plaintiffs contend that the recordings are inadmissible and cannot 25 be considered on summary judgment. 26 objections to the recordings: First, Plaintiffs argue that California Plaintiffs assert three primary 27 28 20 1 Penal Code § 632(a)10 prohibits a person from recording a confidential 2 communication without the consent of all parties to the communication, 3 and Section 632(d) makes such recordings inadmissible in both civil and 4 criminal proceedings. 5 should be excluded under Federal Rule of Civil Procedure 37(c) because 6 Defendants failed to disclose the recordings in their initial 7 disclosures. 8 inadmissible because they were not properly authenticated under Federal 9 Rule of Evidence 902 and Defendants refused to disclose the name of the 10 Second, Plaintiffs contend that the recordings Third, Plaintiffs contend that the recordings are third party vendor to Plaintiffs. 11 1. California Penal Code § 632 12 California Penal Code § 632(a) makes it a criminal offense to 13 “intentionally and without the consent of all parties to a confidential 14 communication, by means of any electronic amplifying or recording 15 device, eavesdrop[] upon or record[] the confidential communication 16 . . . .” 17 obtained as a result of eavesdropping upon or recording a confidential 18 communication shall be admissible in “any judicial, administrative, 19 legislative, or other proceeding.” 20 confidential communication is defined as “any communication carried on 21 in circumstances as may reasonably indicate that any party to the 22 communication desires it to be confined to the parties thereto,” but 23 excludes communications that reasonably may be expected to be overheard 24 or recorded. 25 Additionally, subsection (d) provides that no evidence Cal. Penal Code § 632(d). A Id. Here, it is undisputed that Mobrez was unaware that his calls with 26 Magedson were being recorded and that Mobrez did not give consent for 27 10 28 Both parties repeatedly referred to California Penal Code § 623, which is wholly irrelevant to this case. The relevant eavesdropping statute is California Penal Code § 632. 21 1 the recordings. 2 3 [Magedson Depo.].) 3 that Defendants seek to admit were obtained in violation of California 4 Penal Code § 632(a).11 5 with the laws in the forum state in which the recordings were made 6 (Arizona), if the Court were to engage in a choice-of-law analysis 7 between Arizona and California law, the Court undoubtedly would apply 8 California law, given California’s strong public interest in protecting 9 the confidentiality of certain communications. (Mobrez Corrected Decl. ¶ 12; Borodkin Decl. ¶ 6, Exh. Thus, at the very least, some of the recordings Furthermore, even though the recordings complied See Downing v. 10 Abercrombie & Fitch, 265 F.3d 994, 1006 (9th Cir. 2001). 11 neither California Penal Code § 632 nor Arizona law is relevant to the 12 present action. 13 Nonetheless, The present action is based on federal law (as well as state law) 14 and is proceeding in federal court. 15 has consistently held that [recordings of conversations] [are] 16 admissible in federal court proceedings when obtained in conformance 17 with federal law and without regard to state law.” 18 Americable International, Inc., 883 F. Supp. 499, 503-04 (E.D. Cal. 19 1995) (citing United States v. Adams, 694 F.2d 200, 201-02 (9th Cir. 20 1982)); see Feldman v. Allstate Ins. Co., 322 F.3d 660 (9th Cir. 2003); 21 United States v. Cormier, 220 F.3d 1103, 1111 (9th Cir. 2000); United 22 States v. Little, 753 F.2d 1420, 1434 (9th Cir. 1984). 23 explained in Roberts: 24 26 11 28 Roberts v. As the court [Plaintiff’s] argument has consistently been that his state law ‘privacy privilege’ [under California Penal Code § 632] has been invaded by [defendant’s] actions. However, as previously noted, this present action is based on federal law 25 27 In such cases, “the Ninth Circuit Voice mails would not fall within the prohibitions of California Penal Code § 632 because voice mails are necessarily recorded (and expected to be so) and therefore do not constitute “confidential communications.” Two of the recordings at issue are of voice mails that Mobrez left for Magedson. 22 1 as well as state law. It is well settled the federal law applies to privilege claims brought in actions based in whole or in part on federal law. 2 3 Id. at 504 (citing Pagano v. Oroville Hospital, 145 F.R.D. 683, 687 4 (E.D. Cal. 1993); Heathman v. U.S.D.C., 503 F.2d 1032, 1034 (9th Cir. 5 1974)). 6 be examined under federal law.12 7 Thus, Plaintiffs’ motion to exclude the tape recordings must The Omnibus Crime Control and Safe Streets Act (“the Act”) is the 8 federal law that regulates the interception of oral communications. 9 U.S.C. §§ 2510 et. seq. 18 Section 2511(2)(d) provides that the 10 interception of wire, oral, or electronic communications shall not be 11 unlawful where the interception is done by a party to the conversation 12 or where one of the parties to the conversation has given prior consent 13 to such interception, unless the communication is intercepted for the 14 purpose of committing any criminal or tortuous act. 15 2511(2)(d). 16 clearly gave prior consent to the third party vendor to record all 17 telephone calls coming into the main Ripoff Report telephone number. 18 Further, there is no evidence, nor any suggestion, that the purpose of 19 the recordings was to perpetrate a criminal or tortuous act. 18 U.S.C. § In the present case, Defendants Xcentric and Magedson Although 20 21 22 23 24 25 26 27 28 12 The result would be different if this case were proceeding on the ground of diversity jurisdiction. In diversity cases, “a federal court must conform to state law to the extent mandated by the principles set forth in the seminal case of Erie R.R. v. Thompkins, 304 U.S. 64 (1938).” Feldman v. Allstate Ins. Co., 322 F.3d 660, 666 (9th Cir. 2003). “State evidence rules that are ‘intimately bound up’ with the state’s substantive decision making must be given full effect by federal courts sitting in diversity.” Id. The Ninth Circuit has concluded that California Penal Code § 632 embodies “a state substantive interest in the privacy of California citizens from exposure of their confidential communications by third parties,” and therefore is “properly characterized as substantive law within the meaning of Erie” and must be applied in diversity cases. Id. at 667. Here, however, the Court has federal question jurisdiction. Furthermore, Defendants are asking the Court to use the tapes as evidence to rebut the federal claims asserted by Plaintiff – i.e., the RICO causes of action. Thus, as stated above, federal law relating to the interception of wire communications applies. 23 1 Plaintiffs allege that Defendants used the phone to communicate 2 extortionate threats to Plaintiffs, even if that were true, there is no 3 suggestion that the recordings were used for the purpose of extortion. 4 To the contrary, Defendants have presented evidence that all calls to 5 the Ripoff Report’s main telephone number were recorded in the ordinary 6 course of business. 7 federal law. 8 9 10 In sum, because the recordings at issue comply with federal law, they may be admitted as evidence without regard to California Penal Code § 632. 11 12 Therefore, the recordings at issue do not violate 2. Failure to Disclose Recordings in Initial Disclosures Next, Plaintiffs argue that the Court should exclude the tape 13 recordings under Federal Rule of Civil Procedure 37(c). 14 provides that “if a party fails to provide information or identify a 15 witness as required by Rule 26(a) or (e), the party is not allowed to 16 use that information or witness to supply evidence on a motion, at a 17 hearing, or at a trial, unless the failure was substantially justified 18 or is harmless.” 19 the recordings in their initial disclosures on April 21, 2010, as 20 required under Rule 26(a), even though Defendants knew of such tape 21 recordings before April 21, 2010. 22 7, 2010 to disclose the tape recordings at the deposition of Plaintiff 23 Mobrez. 24 Rule 37(c) Plaintiffs assert that Defendants failed to disclose This argument also fails. Instead, Defendants waited until May As Plaintiffs recognize in their 25 briefs, Rule 26(a) does not require parties to disclose impeachment 26 evidence in their initial disclosures. 27 Service, Inc., 528 F.3d 1166, 1172 (9th Cir. 2008). 28 24 Gribben v. United Parcel In the context of 1 the present motion, Defendants seek to introduce the tape recordings 2 only to impeach Plaintiffs’ accounts of the conversations between 3 Mobrez and Magedson. 4 that limited purpose. 5 3. At a minimum, the recordings are admissible for Inadmissible Under the Federal Rules of Evidence 6 Plaintiffs’ final objection is that the recordings were not 7 properly authenticated and are inadmissible under the Federal Rules of 8 Evidence 902 and 1002. 9 a tape recording must normally be accompanied by proof that the The Court agrees. “When offered into evidence, 10 recording is what it is purported to be.” 11 WILLIAM E. WEGNER, 12 TRIALS 13 the evidence must show that the tape is a “true, accurate, and 14 authentic recording of the conversation, at a given time, between the 15 parties involved.” United States v. Andreas, 23 F. Supp. 2d 835, 840 16 (N.D. Ill. 1998). Courts generally consider the following 17 foundational factors when determining whether a tape recording is 18 admissible: (1) whether the recording device was capable of taking the 19 conversation; (2) whether the operator of the device was competent to 20 operate it; (3) whether the recording is authentic and correct; (4) 21 whether no change, additions or deletions have been made to the 22 recording; (5) whether the recording has been preserved in a manner 23 that is shown to the court; (6) whether the speakers are identified; 24 and (7) whether the conversation elicited was made voluntarily and in 25 good faith. 26 TRIALS 27 1048, 1057 (8th Cir. 2006), Penguin Books U.S.A., Inc. v. New Christian AND AND AND ROBERT E. JONES, GERALD E. ROSEN, JEFFREY S. JONES, RUTTER GROUP PRACTICE GUIDE: FEDERAL CIVIL EVIDENCE § 8:472 (2009); Fed. R. Evid. 901(a). JONES & ROSEN ET AL., The proponent of RUTTER GROUP PRACTICE GUIDE: FEDERAL CIVIL EVIDENCE § 8:472.2 (citing United States v. Oslund, 453 F.3d 28 25 1 Church of Full Endeavor, Ltd., 262 F. Supp. 2d 251, 264 (S.D.N.Y. 2 2003)). 3 Here, Defendants offer the Declaration of Edward Magedson to 4 authenticate the recordings. 5 record the conversations. 6 recordings submitted to the Court are accurate copies of the audio 7 files that he was emailed by the third party vendor that actually made 8 the recordings. 9 Defendants have refused to reveal the name of the third party vendor to 10 the Plaintiffs despite the Plaintiffs’ reasonable request (see Magedson 11 Depo. at pg. 74) and have not offered any declarations from the third 12 party vendor or any information about the method of recording, the 13 equipment used, or how the recordings are kept in the ordinary course 14 of the vendor’s business. 15 recordings to the Court or to the Plaintiffs. 16 However, Magedson admittedly did not At best, Magedson can only state that the (Magedson Decl., dated May 24, 2010, ¶¶ 25-29.) Defendants have not produced the original Further, the foundational shortcomings are especially problematic 17 here because Plaintiffs have presented facts indicating that the 18 recordings may not be accurate or trustworthy. 19 phone records indicate the duration of each of the calls made from 20 Mobrez to Magedson in March and April 2009. 21 In most instances, the duration of the calls is considerably longer 22 than the length of the recorded conversation submitted to the Court. 23 Thus, Plaintiffs suspect that the recordings may have been altered or 24 edited. 25 discrepancy – that is, that the third party vendor does not begin 26 recording the calls until after the caller has navigated through an 27 automated series of prompts, which takes some time – neither the Court Specifically, Mobrez’s (Mobrez Depo., Exh. 21.) While Defendants have a ready explanation for the time 28 26 1 nor the Plaintiffs can verify this without testimony from the third 2 party vendor who actually recorded the conversations. 3 Magedson’s assertion that he did not personally alter or edit the 4 recordings does not resolve the issue,13 as the recordings could have 5 been altered by the third party vendor. Finally, 6 For these reasons, the Court finds that the tape recordings have 7 not been properly authenticated and are not admissible as evidence in 8 support of Defendants’ motion for summary judgment. 9 Nonetheless, this ruling does not change the landscape of the 10 summary judgment motion to any significant degree. 11 recordings were revealed to Plaintiffs during the Mobrez deposition on 12 May 7, 2010, but before the summary judgment motion was filed, Mobrez 13 and Llaneras each filed declarations with the Court seeking to correct 14 their May 3, 2010 declarations. 15 filed on May 20, 2010, Mobrez admits that when he filed the May 3, 2010 16 declaration, he was “mistaken as to the substance of the six phone 17 conversations between [himself] and Magedson” and that he had “confused 18 some of what was said in [his] telephone conversations with what was 19 written in e-mail correspondence.” 20 Similarly, in Llaneras’s corrected declaration filed on May 20, 2010, 21 Llaneras states that “the descriptions of the telephone conversations 22 in my May 3, 2010 declaration were not accurate” and that she too “had 23 . . . confused some of what [she] overheard with some of what [she] had 24 read in emails.” 25 each admitted that their May 3, 2010 testimony regarding the phone After the In Mobrez’s corrected declaration (Mobrez Corrected Decl. ¶¶ 2, 4.) (Llaneras ¶ 3.) Thus, Mobrez and Llaneras now have 26 13 27 28 This statement is not entirely accurate either, as Defendants admitted in later briefing that the actual electronic files provided to Plaintiffs had been redacted so as to exclude the name of the third party vendor in the file titles. (Defs. Response to Objections at 9.) 27 1 calls with Magedson is inaccurate and unreliable. 2 and Llaneras did not offer any additional description of what was said 3 during the April and May 2009 phone calls in their corrected 4 declarations, with one exception. 5 some reference to Mobrez having a telephone conversation on an 6 unspecified date with an unidentified person who mentioned “five grand” 7 as the cost of joining the Corporate Advocacy Program. 8 5; Llaneras Decl. ¶ 4.) 9 Additionally, Mobrez The corrected declarations each make (Mobrez Decl. ¶ In sum, even excluding the recorded phone calls, the only evidence 10 that the Court can consider regarding the communications between 11 Plaintiffs and Defendants that are relevant to Plaintiffs’ extortion 12 claim are: (1) the emails between the parties; (2) the limited 13 information contained in the Mobrez and Llaneras corrected declarations 14 filed on May 20, 2010 – that is, information about the emails and about 15 the call regarding “five grand;” and (3) Magedson’s testimony regarding 16 the substance of his calls with Mobrez, which is not refuted by 17 Plaintiffs’ corrected declarations. 18 Court finds that this evidence, even construing all reasonable 19 inferences in support of Plaintiffs, fails to demonstrate a triable 20 issue on Plaintiffs’ RICO claims.14 For the reasons stated below, the 21 D. 22 Plaintiffs contend that Defendants were part of an enterprise 23 engaged in a pattern of racketeering activity in violation of 18 U.S.C. 24 § 1962(c), or alternatively, that Defendants conspired to violate the 25 RICO statute under 18 U.S.C. § 1962(d). 26 14 27 28 Plaintiffs’ RICO Claims To assert a RICO claim, Further, it is clear from Plaintiffs’ Opposition that Plaintiffs are not relying on the substance of the phone calls to support their claims that Defendants engaged in attempted extortion. Instead, Plaintiffs appear to rely solely on the emails Magedson sent to Mobrez and the content on Defendants’ website. 28 1 Plaintiffs must prove the following elements: (1) conduct (2) of an 2 enterprise (3) through a pattern (4) of racketeering activity 3 consisting of at least two predicate acts (5) causing injury to 4 Plaintiffs’ business or property. 5 F.3d 1083, 1086 (9th Cir. 2002); Gillmor v. Thomas, 490 F.3d 791, 798 6 (10th Cir. 2007); see Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 496 7 & n.14 (1985); 18 U.S.C. § 1961(5). 8 acts that constitute “racketeering activity” for purposes of the RICO 9 statute. Chaset v. Fleer/Skybox Int’l, 300 Section 1961 defines the predicate Plaintiffs contend that Defendants committed the predicate 10 acts of attempted extortion under California Penal Code §§ 518 and 523, 11 and wire fraud under 18 U.S.C. § 1343. 12 In their motion for summary judgment, Defendants assert that 13 Plaintiffs have not presented sufficient evidence to establish a 14 triable issue of fact that Defendants engaged in the predicate act of 15 extortion or attempted extortion. 16 Court agrees. 17 18 1. For the reasons stated below, the Extortion California Penal Code § 518 defines extortion as “the obtaining of 19 property from another, with his consent, or the obtaining of an 20 official act of a public officer, induced by a wrongful use of force or 21 fear, or under color of official right.” 22 Section 519 of the Penal Code defines “fear” as follows: 23 24 25 26 27 Cal. Penal Code § 518. Fear, such as will constitute extortion, may be induced by a threat, either: 1. To do an unlawful injury to the person or property of the individual threatened or of a third person; or, 2. To accuse the individual threatened, or any relative of his, or member of his family, of any crime; or, 28 29 1 2 3 3. To expose, or to impute to him or them any deformity, disgrace or crime; or, 4. To expose any secret affecting him or them. 4 Cal. Penal Code § 519 (emphasis added). 5 523, a person who attempts to commit extortion through the sending of 6 any writing referencing an actionable threat as defined in Section 519 7 is guilty of extortion, notwithstanding the fact that the person did 8 not actually obtain any money or property by means of the threat. 9 Penal Code § 523; Monex Deposit Co. v. Gilliam, 666 F. Supp. 2d 1135, 10 11 12 13 14 1136-37 (C.D. Cal. 2009). Under California Penal Code § Cal. Specifically, Section 523 provides: Every person who, with intent to extort any money or other property from another, sends or delivers to any person any letter or other writing, whether subscribed or not, expressing or implying, or adapted to imply, any threat such as specified in Section 519, is punishable in the same manner as if such money or property were actually obtained by means of such threat. 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Cal. Penal Code § 523. In short, attempted extortion accomplished through means of a writing under Section 523 is actionable and constitutes a predicate act under RICO. See Streck v. Peters, 855 F. Supp. 1156, 1163 (D. Hawai’i 1994) (definition of racketeering activity under 18 U.S.C. § 1961(1)(A) includes extortion or attempted extortion under state law). Finally, although not relied upon by Plaintiffs here, California Penal Code § 524 criminalizes attempted extortion by means of a threat even where such threats are not made in writing. Cal. Penal Code § 524. Plaintiffs contend that Defendants made two separate threats in writing in an attempt to extort money from Plaintiffs. The first is “the implied threat that negative statements about the subject of a Ripoff Report will remain online and prominently featured in search 30 1 results unless the subject joins the Corporate Advocacy Program 2 (“CAP”).” 3 solicitations to join CAP are part of the implied threat.” 4 Second, Plaintiffs contend that Defendants “threaten to counter-sue 5 anybody that sues them and that such litigants always lose and always 6 pay Defendants’ attorneys fees.” 7 argument, Plaintiffs rely upon the standard email that Magedson sent to 8 Mobrez on May 5, 2009, which contains a warning to the effect that 9 suing the Ripoff Report would be a losing battle. (Opp’n at 9.) Thus, Plaintiffs contend that “Defendants’ (Id.) 10 these arguments in reverse order. 11 a. 12 (Id.) In support of this latter The Court addresses The Threat to Sue As stated in the factual section above, on May 5, 2009, Magedson 13 sent Mobrez a standard “form” email which contained a warning about 14 suing the Ripoff Report. 15 you who threaten to sue, be prepared to go the long haul, and when you 16 want to do a walk away because you realize you cannot and will not win 17 because you filed a frivolous law suit, . . . you will be paying for 18 our legal bill and in some cases and then some, before we will let you 19 out of the case.” 20 email also states that the Ripoff Report has been sued more than two 21 dozen times and has never lost a case. 22 thinking of suing us, I hope you are personally prepared for this. 23 are.” 24 for Communications Decency Act” to understand why the Ripoff Report 25 often wins lawsuits against it. 26 that Ripoff Report has been sued in the past and has won, that Ripoff (Id.) Specifically, the email reads: “To those of (Mobrez Decl., dated May 3, 2010, Exh. G.) The It goes on: “If you are We Finally, the email invites readers to “do a Google search (Id.) 27 28 31 In sum, the email indicates 1 Report will vigorously defend itself in any lawsuit, and that Ripoff 2 Report will seek attorneys’ fees for frivolous suits filed against it. 3 The statements in the May 5, 2009 email are not actionable threats 4 within the meaning of Section 519. 5 and the Court has not found, any authority holding that the threat to 6 defend oneself in a lawsuit brought by another constitutes extortion. 7 The closest analogy is to cases where the defendant threatens to bring 8 a civil or criminal action against the plaintiff if the plaintiff fails 9 to pay a certain sum. First, Plaintiffs have not cited, Under California law, however, it is well- 10 settled that the threat to take legal action cannot constitute 11 extortion unless the threat was made with knowledge that the threatened 12 claim was false and without merit. 13 923, 939-40 (9th Cir. 2006) (California’s extortion statute does not 14 impose liability for threats of litigation unless the asserted claims 15 rise to the level of a sham); Furman v. California Satellite Sys., 179 16 Cal. App. 3d 408, 426 (Ct. App. 1986) (“to be actionable [in extortion] 17 the treat of prosecution must be made with knowledge of the falsity of 18 the claim”), disapproved on other grounds by, Silberg v. Anderson, 50 19 Cal. 3d. 205 (1990); Leeper v. Beltrami, 53 Cal. 2d 195, 204 (1959) (it 20 is generally true that the threat to take legal action cannot 21 constitute duress; the only exception is where, in making such threats, 22 defendants knew the claim asserted was false); In the Matter of Gladys 23 Nichols, 82 Cal. App. 73, 76 (Ct. App. 1927) (same). 24 See Sosa v. DirecTV, Inc., 437 F.3d Here, Plaintiffs have not introduced any evidence that Defendants’ 25 “threats” to defend themselves in suits brought by others or to seek 26 attorneys’ fees for frivolous suits launched against them were made 27 with knowledge of the falsity of such claims. 28 32 To the contrary, the 1 Court can take judicial notice of the fact that Defendants have, in 2 fact, been successful in numerous civil suits asserted against them in 3 connection with the Ripoff Report. 4 for the payment of attorneys’ fees as a sanction for asserting a 5 frivolous lawsuit. 6 the substance of the May 5, 2009 email does not allow for an inference 7 that Defendants knowingly threatened to bring a false claim against 8 Plaintiffs, and Plaintiffs have presented no other evidence in that 9 regard. 10 Further, various federal laws allow See 28 U.S.C. § 1927; Fed. R. Civ. Proc. 11. Thus, For this reason, Plaintiffs have failed to present any triable issue of fact regarding Defendants’ implied threat to sue. 11 Plaintiffs’ argument fails for an additional, independent reason. 12 Even if the statements in the May 5, 2009 email constituted actionable 13 threats (which they do not), the statements are not connected with any 14 attempt to obtain money or property from Plaintiffs. 15 case where the defendants threatened to sue the plaintiff unless the 16 plaintiff paid a certain sum or delivered property to defendants. 17 Sosa, 437 F.3d at 926; Fuhrman, 179 Cal. App. 3d at 417; People v. 18 Umana, 138 Cal. App. 4th 625 (Ct. App. 2006). 19 in the May 5, 2009 email (or any other evidence submitted to the Court) 20 implies that Defendants will refrain from defending themselves in a 21 civil suit or will forego the right to any possible counterclaim in 22 exchange for money. 23 boast about Defendants’ past legal successes and put the recipient on 24 notice that Defendants will vigorously defend themselves in any 25 lawsuits. 26 Sections 518, 519 or 523. 27 (2006) (“rude, aggressive, or even belligerent pretrial negotiations, This is not a Cf. To the contrary, nothing At most, the May 5, 2009 email is an attempt to This does not constitute extortion within the meaning of See Flately v. Mauro, 39 Cal. 4th 299, 28 33 1 whether verbal or written, that may include threats to file a lawsuit, 2 . . . [do not] necessarily constitute extortion.”). 3 4 b. The Implied Threat Associated with the CAP Program Next, Plaintiffs contend that Defendants’ “solicitations” to 5 Plaintiffs to join the CAP Program constitute an implied threat that 6 negative information about Plaintiffs will remain online and will be 7 featured in search results unless Plaintiffs pay the fees for the 8 program. 9 or to impute to [Plaintiffs] any deformity, disgrace or crime” or to 10 11 Plaintiffs contend that this constitutes a threat to “expose, “expose a secret affecting [Plaintiffs].” Cal. Penal Code § 519. Plaintiffs’ argument fails for several reasons. First, there is 12 no evidence that Defendants ever threatened to impute to Plaintiffs any 13 disgrace or to expose a secret affecting Plaintiffs. 14 reports about Plaintiffs that appeared on the Ripoff Report website 15 did, in some instances, accuse Plaintiffs of crimes or impute to them a 16 disgrace. 17 Defendants wrote any of the negative comments or reports about 18 Plaintiffs or that Defendants contributed in any substantive way to the 19 negative content of those reports. 20 presented any evidence that Defendants instructed or encouraged anyone 21 to write negative reports about Plaintiffs. 22 evidence that Defendants ever threatened that they would write or post 23 more negative information about Plaintiffs if Plaintiffs did not join 24 the CAP program. 25 any of the emails to Plaintiffs. 26 to expose Plaintiffs; to the extent that Plaintiffs were exposed, such 27 exposure was done at the hands of the third parties who wrote the The negative But Plaintiffs have not presented any evidence that Similarly, Plaintiffs have not Finally, there is no Nothing even coming close to such a threat appears in In short, Defendants never threatened 28 34 1 negative reports, not Defendants. 2 App. 2d 719, 722 (Ct. App. 1966) (to expose a plaintiff within the 3 meaning of Section 519(4), “the thing held secret must be unknown to 4 the general public, or to some particular part thereof which might be 5 interested in obtaining knowledge of the secret”); People v. Anderson 6 et al., 75 Cal. App. 365 (Ct. App. 1925), disapproved on other grounds 7 by In re Wright, 65 Cal. 2d 650 (1967). 8 See People v. Peniston, 242 Cal. Plaintiffs nonetheless argue that Defendants implicitly made a 9 threat of continued exposure – that is, that Defendants would allow the 10 negative information to remain on the website unless Plaintiffs joined 11 the CAP Program. 12 such a threat could be actionable under Section 519, there is no 13 evidence that Defendants made such a threat to Plaintiffs. 14 recognizes that, for purposes of extortion, “it is not necessary that 15 the threat be apparent from the face of the [writing], nor even 16 necessary that it should be implied therefrom. . . . [I]f the language 17 used is adapted to imply a threat, then the writing is sufficient.” 18 See People v. Fox, 157 Cal. App. 2d 426 (1958). 19 lenient standard, however, the communications from Defendants to 20 Plaintiffs do not suggest the threat of continued exposure unless 21 Plaintiffs join the CAP Program. 22 will examine both the phone conversations and the email communications 23 between the parties. 24 Even assuming (without any relevant authority) that The Court Even under this To emphasize this point, the Court As to the phone conversations, it is undisputed that Mobrez and 25 Magedson spoke a number of times on the phone. 26 however, that the two ever discussed the substance of the CAP Program 27 or the fees associated therewith. There is no evidence, In fact, Magedson testified that as 28 35 1 a general policy, he never discusses the CAP Program over the phone 2 unless the person has already submitted an application to join the 3 program, which Mobrez never did. 4 conversations with Mobrez, he never asked Mobrez for money, never asked 5 him if his company was profitable or how it made money, and never told 6 Mobrez that the payment of a fee to Xcentric would result in negative 7 information being changed into a positive. 8 these facts. 9 else) ever told Mobrez that Xcentric would remove or block negative 10 11 Magedson testified that during his Mobrez does not dispute Moreover, there is no evidence that Magedson (or anyone reports about Plaintiffs in exchange for a fee. Mobrez’s testimony that he remembers a phone call on some 12 unspecified date with some unspecified person in which $5,000 was 13 mentioned as the fees for the CAP Program does not create a triable 14 issue of fact. 15 Moreover, this statement does not suggest or imply that payment of such 16 a fee will result in less exposure from the negative reports on the 17 website (or, alternatively, that failure to pay would result in more 18 exposure). 19 This statement is not attributed to Defendants. The email communications between the parties likewise do not 20 support Plaintiffs’ position. 21 discussion of the CAP Program. 22 however, is any statement or suggestion that joining the CAP Program 23 will result in negative reports being taken off the website or blocked 24 from publication. 25 emails to Mobrez repeatedly state that: “a Rip-off Report cannot be 26 taken off” (Mobrez Decl., Exh. G.); “WE DO NOT remove any Rip-off 27 Reports” (id.); for persons interested in joining the CAP Program, The emails contain some general Notably absent from the emails, In fact, the exact opposite is true. 28 36 Magedson’s 1 “Reports are never deleted” (id.); “we do not remove a submitted Rip- 2 off Report, and we never will. 3 reports for money, but that is just plain false.” (id.); “we DO NOT 4 REMOVE REPORTS. . . . No amount of money can change this” (Mobrez 5 Decl., Exh. K.) 6 CAP Program will not result in removal of the Ripoff Reports and that 7 Defendants will not remove the reports for any fee. 8 not presented any evidence to the contrary. 9 Some people claim that we remove These writings clearly state that membership in the Plaintiffs have Plaintiffs also rely upon two pages of the Ripoff Report website 10 which were referenced in Magedson’s emails by way of electronic links. 11 The first page contains information about the benefits that CAP members 12 receive by enrolling in the program. 13 These benefits include: (1) the Ripoff Report will attempt to verify 14 the truthfulness of the complaints submitted about the CAP member; (2) 15 Ripoff Report will send a positive email to each complainant explaining 16 that the company has joined the CAP program and has offered to 17 negotiate to resolve the complaint; (3) Ripoff Report will include an 18 update to each report indicating the CAP members’ commitment to 19 righting customer wrongs; and (4) the CAP Program gives the CAP member 20 the opportunity to provide its side of the story and include a link to 21 its website. 22 information about the fees charged for the CAP Program. 23 second webpage purportedly contains an application form for the CAP 24 Program. 25 application form to the Court; thus, it is unclear what the form 26 contains. 27 28 (Id.) (Mobrez Corrected Decl., Exh. M.) This webpage also includes some general (Id.) However, Plaintiffs have not produced a copy of this (See PSGI 25.)15 15 Plaintiffs’ description of contents of the CAP Application Form is not supported by any evidence and violates the best evidence rule. Fed. R. Evid. 1002. 37 The 1 Once again, none of the web pages that Magedson referenced via 2 electronic links in his emails to Plaintiffs contain any statements 3 that membership in the CAP Program will result in negative reports 4 being taken off the website or blocked from publication. 5 contrary, one of the webpages describes in some detail the features of 6 the CAP Program. 7 suggestion that negative reports will be removed or blocked from the 8 website. 9 To the The description does not contain any mention or In sum, none of the communications Defendants sent to Plaintiffs 10 contain any suggestion that the CAP Program (or the payment of fees) 11 would result in negative reports being taken off the website or that 12 such reports would no longer be featured in search results. 13 clearly stated that negative reports are never taken off the website 14 and that no amount of money would change this result; thus, it is 15 absurd to contend that Defendants attempted to induce Plaintiffs to pay 16 money to remove or block reports from the website.16 17 Court can tell, all of the communications directed to Plaintiffs 18 describe the CAP Program as a public relations effort – that is, that 19 the fees for the program are for Defendants’ services in investigating 20 the truth of the reports and acting as a liaison between the CAP member 21 and the complainant to help resolve the dispute. 22 Plaintiffs restore their reputation and facilitate resolution with the 23 complainants in exchange for a fee does not constitute a threat under 24 California Penal Code § 519. 25 26 27 28 16 Defendants As far as the The offer to help Plaintiffs also rely on email communications between Magedson and third parties, namely Tina Norris. See PSGI 21, 26, 27, 28, 30, 32-38. Absent any evidence that Plaintiffs knew of these email communications in April and May 2009 when the alleged extortion took place, or that Defendants intended these email communications to reach Plaintiffs, they are not relevant to any alleged attempt by Defendants to induce Plaintiffs to pay money to Defendants by means of force or fear. 38 1 Finally, the one case cited by Plaintiffs in their Opposition, 2 Monex Deposit Co. v. Gilliam, 680 F. Supp. 2d 1148, is easily 3 distinguishable. 4 www.MonexFRAUD.com which contained negative information about 5 plaintiff, Monex Deposit Company. 6 Co. v. Gilliam, No. SACV 09-00287-JVS (RNBx), 2009 WL 2870150, at *1 7 (C.D. Cal. 2009) (preliminary injunction ruling). 8 testified that he created the website because his “mission was to 9 destroy Monex completely through a relentless marketing and awareness In Monex, the defendants created a website called See id. at 1159, 1160; Monex Deposit One defendant 10 campaign.” 11 defendants traveled to plaintiff’s headquarters and delivered a letter 12 with a demand and a “Plan of Action” to Monex employee Harvey Kochen. 13 Id. at 1156. 14 accuse and expose Monex of crimes. 15 letter and Plan of Action stated that various governmental agencies and 16 news outlets would be notified of criminal activities of Monex if Monex 17 did not pay to settle claims “north of $20 million.” 18 1158. 19 Monex by way of the website MonexFRAUD.com, id. at 1159, and warned 20 Monex that more negative information would be posted to the website if 21 the $20 million demand was not satisfied. 22 meeting on March 19, 2009, defendants told a Monex employee that they 23 would take down the www.MonexFRAUD.com website if Monex would pay them 24 $20 million. 25 granted summary judgment in Monex’s favor on its extortion claims 26 against the defendant creator of the website. 680 F. Supp. 2d at 1159. After creating the website, the The letter and Plan of Action explicitly threatened to Id. at 1157. Specifically, the See id. at 1157, Further, the letter referenced the considerable “damage done” to Id. at 1160. Id. at 1160. Finally, at a On the basis of these facts, the Court 27 28 39 Id. at 1156-61. 1 The present case bears no resemblance to Monex. Unlike in Monex, 2 the Plaintiffs here have not presented any evidence that Defendants 3 created the negative reports about Plaintiffs on the RipoffReport.com 4 website or solicited others to create reports about Plaintiffs. 5 Further, unlike the defendants in Monex, here, there is no evidence 6 that Defendants ever demanded money from Plaintiffs in exchange for the 7 removal of negative reports. 8 of reports was ever advertised as part of the CAP program. 9 contrary – it is undisputed that Defendants repeatedly told Plaintiffs 10 Indeed, there is no evidence that removal To the that reports are never removed from the website. 11 In sum, for the reasons stated above, the Court finds that no 12 triable issue of fact exists as to whether Defendants engaged in 13 attempted extortion. 14 Defendants do not, as a matter of law, suggest or imply any threat 15 within the meaning of California Penal Code § 519. 16 judgment is GRANTED in Defendants’ favor as to the third and fourth 17 causes of action under RICO, to the extent those claims are based on 18 alleged predicate acts of extortion. 19 IV. 20 The communications between Plaintiffs and Thus, summary PLAINTIFFS’ RULE 56(f) REQUEST On Friday, July 9, 2010, one day prior to the summary judgment 21 hearing, Plaintiffs filed an Ex Parte Application to deny or continue 22 Defendants’ motion for summary judgment so as to allow Plaintiffs to 23 conduct further discovery under Federal Rule of Civil Procedure 56(f). 24 Defendants oppose the request. 25 A. 26 Rule 56(f) provides that, “[i]f a party opposing the motion [for 27 Legal Standard summary judgment] shows by affidavit that, for specified reasons, it 28 40 1 cannot present facts essential to justify its opposition,” the court 2 may deny the motion for summary judgment or continue the hearing to 3 allow additional discovery or “issue any other just order.” 4 Evid. 56(f). 5 must “identify by affidavit the specific facts that further discovery 6 would reveal, and explain why those facts would preclude summary 7 judgment.” 8 1101 (9th Cir. 2006). 9 motions are generally favored so long as the opposing party makes (a) a Fed. R. To obtain a Rule 56(f) continuance the opposing party Tatum v. City & County of San Francisco, 441 F.3d 1090, The Ninth Circuit has held that Rule 56(f) 10 timely application (b) that specifically identifies (c) relevant 11 information, and (d) where there is some basis for believing that the 12 information sought actually exists. 13 Bankcard Holders of America, 784 F.2d 1472, 1475 (9th Cir. 1986) 14 (reversing district court’s denial of a Rule 56(f) continuance). 15 However, where the discovery sought is irrelevant and could not defeat 16 the motion for summary judgment or where the opposing party fails to 17 identify the specific facts such discovery will likely reveal, denial 18 of the motion is appropriate. 19 San Francisco, 441 F.3d 1090, 1100 (9th Cir. 2006); Springs Window 20 Fashions LP v. Novo Indust., L.P., 323 F.3d 989, 998 (Fed. Cir. 2003); 21 United States v. Bob Stofer Oldsmobile-Cadillac, Inc., 766 F.2d 1147, 22 1152-53 (7th Cir. 1985). Visa Int’l Service Ass’n v. See, e.g., Tatum v. City and County of 23 B. 24 As stated above, to justify a continuance under Rule 56(f), Analysis 25 the discovery sought must be “essential” to Plaintiffs’ opposition. 26 Here, Plaintiffs concede that the additional discovery outlined in 27 their Rule 56(f) motion is not necessary to their opposition on summary 28 41 1 judgment. 2 they have already submitted enough evidence opposing the MSJ showing a 3 genuine issue of fact for the August 3, 2010 trial.” 4 Nonetheless, “to avoid all doubt” and in an abundance of caution, 5 Plaintiffs sought a continuance to obtain the following evidence: (1) a 6 “Second Questionnaire” that Defendants sent to applicants of the CAP 7 program and a sample of the written agreement Defendants enter into 8 with CAP members; (2) deposition testimony from Defendants regarding 9 certain “impeachment evidence” that Plaintiffs recently identified; and Specifically, Plaintiffs argue: “Plaintiffs believe that (Opp’n at 6.) 10 (3) a further deposition of Defendant Magedson.17 11 stated below, the Court holds that Plaintiffs have not met their burden 12 of demonstrating that this evidence would assist them in defeating 13 Defendants’ motion for summary judgment as to the RICO/extortion 14 claims. 15 1. 16 For the reasons Documents Regarding the CAP Program First, Plaintiffs seek a copy of a “Second Questionnaire” and “CAP 17 Agreement” that were identified in Defendant Xcentric’s Person Most 18 Knowledgeable deposition on June 2, 2010. 19 person most knowledgeable of Xcentric on June 2, 2010. 20 of Plaintiffs’ questioning about how persons are enrolled in the CAP 21 program, Magedson testified that, if a person expresses an interest in 22 joining the CAP program, he sends him or her a questionnaire that is 23 different from, and more detailed then, the questionnaire included on 24 the Ripoff Report website. 25 joins the program, the CAP member enters into a written contract with Magedson testified as the In the course Magedson also testified that when a person 26 27 28 17 At the hearing on July 12, 2010, the Court confirmed with Plaintiffs’ counsel that these three subjects of discovery were the only bases for Plaintiffs’ Rule 56(f) Motion. 42 1 Xcentric – the “CAP Agreement.” 2 to both the Second Questionnaire and the CAP Agreement and could 3 produce them if directed to do so by his attorneys. 4 not been produced to Plaintiffs. 5 Magedson testified that he has access The documents have Plaintiffs contend that this evidence is necessary because, “the 6 manner in which Defendants present the ‘Second Questionnaire’ to 7 applicants for CAP and the extrinsic circumstances under which 8 Defendants offer to enter into the CAP Agreements amount to attempted 9 extortion under California law and a pattern of racketeering under the 10 federal civil RICO statutes.” 11 response, Defendants argue that their motion for summary judgment does 12 not challenge the absence of a “pattern” of racketeering activity for 13 purposes of RICO. 14 standing to bring the RICO action – that is, whether Plaintiffs were 15 ever the victims of alleged extortion attempts. 16 that “whether or not Defendants may have engaged in extortion or 17 attempted extortion as to other non-parties does not cure the total 18 lack of evidence showing that Plaintiffs were actually extorted.” 19 (Opp’n at 5.) 20 (Ex Parte Application at 14.) In Instead, Defendants’ motion challenges Plaintiffs’ The Court agrees with Defendants. Defendants contend Plaintiffs admitted at the July 21 12, 2010 hearing that the Second Questionnaire and the CAP Agreement 22 were never sent to the Plaintiffs at any time and that they did not 23 learn of such documents until after this lawsuit was filed. 24 while these documents may be relevant to the issue of “pattern”, they 25 cannot assist Plaintiffs in showing that a triable issue of fact exists 26 as to whether Defendants attempted to extort money from Plaintiffs in 27 2009. Thus, The situation might be different if there was a dispute as to 28 43 1 content of the communications between Plaintiffs and Defendants – for 2 example, if Plaintiffs testified that Defendants had sent them these 3 documents or presented the documents to Plaintiffs in connection with 4 threats or demands for money, and Defendants denied doing so, the fact 5 that Defendants sent these documents to others could be relevant. 6 But here, there is no material dispute regarding the written 7 communications Defendants sent to Plaintiffs; thus, the documents are 8 entirely irrelevant to whether Defendants intended to extort money from 9 Plaintiffs. 10 2. Impeachment Evidence 11 Second, Plaintiffs seek testimony from Defendants under oath 12 regarding an email communication Plaintiffs recently learned of between 13 Defendants’ General Counsel and a third party. 14 Plaintiffs contend that they recently were in contact with a third- 15 party witness named Jan Smith. 16 copy of an email sent by Defendants’ General Counsel, David Gingras, to 17 Smith regarding the removal of reports from the Ripoff Report website. 18 (Borodkin Decl., Exh. 32.) 19 Gingras told Smith that in December of 2009, the Ripoff Report agreed 20 to remove a report on its website at the request of counsel for a 16- 21 year-old girl. 22 embarrassing report about him on RipoffReport.com. 23 father’s unusual last name, and when persons searched for her, they 24 discovered the embarrassing report. 25 took the report off the website “to help a 16 year-old girl during the 26 Christmas season” and “did not ask for or receive a dime” in exchange 27 for doing so. Specifically, Smith emailed Plaintiffs’ counsel a In the email, dated January 15, 2010, The girl’s father had just died, and there was a very (Id.) The girl shared her Gingras told Smith that Xcentric Gingras also stated: “Of course, we can’t really 28 44 1 advertise this because once we start saying that we’re willing to help 2 some people, it sort of opens the floodgates for everyone to demand the 3 same treatment. 4 anything/everything when asked, but that’s just not something Ed is 5 willing to do at this point. 6 I know you’d like it if we would just take down Maybe someday, but not now.” (Id.) Plaintiffs contend that this evidence is relevant to Defendants’ 7 credibility because it impeaches Defendants’ repeated prior statements 8 to Plaintiffs (including sworn deposition testimony) that Defendants 9 never remove or take down reports. Plaintiffs seek further discovery 10 regarding “Defendants’ explanation for this apparent contradiction of 11 Defendants’ statements under oath.” 12 response, Defendants contend that Plaintiffs have already obtained this 13 evidence from a third party who is able to authenticate the document; 14 thus, Plaintiffs do not need discovery from Defendants regarding this 15 email. 16 wholly irrelevant for purposes of summary judgment because the Court is 17 already obligated to draw every possible inference in favor of the non- 18 moving party. 19 presented any argument as to why this evidence is relevant to the 20 predicate act(s) of attempted extortion. 21 (Ex Parte Application at 11.) In Additionally, Defendants argue that “impeachment evidence” is Finally, Defendants contend that Plaintiffs have not The Court agrees that Plaintiffs have failed to demonstrate how 22 the Jan Smith email (and any testimony from Defendants related thereto) 23 would assist them in defeating Defendants’ motion. 24 to a third party over six months after the alleged extortion attempts, 25 is entirely irrelevant to Plaintiffs’ extortion claim. 26 above, Plaintiffs’ extortion theory is that Defendants made implicit 27 threats to keep the negative reports about Plaintiffs on the website 28 45 The email, written As stated 1 unless they paid fees for the CAP Program. 2 however, makes no mention of the CAP Program. 3 indicates that Defendants sometimes remove negative Ripoff Reports upon 4 request, the email expressly disavows that Defendants do so in exchange 5 for money. 6 parties entirely unknown to Plaintiffs at the time of the alleged 7 extortion attempts cannot create a triable issue of fact that 8 Defendants attempted to extort money from Plaintiffs. 9 Further, while the email Finally, and most importantly, communications to third 3. 10 The Jan Smith email, Further Deposition of Magedson Finally, Plaintiffs seek a further deposition of Defendant 11 Magedson for an additional 1.5 hours. 12 deposed in this action twice. 13 the person most knowledgeable for Xcentric, LLC under Federal Rule of 14 Civil Procedure 30(b)(6). 15 Request ¶ 23.) 16 Magedson was deposed in his personal capacity for approximately 5 1/2 17 hours on June 8, 2010. 18 deposition due to “irreconcilable impasses regarding whether Defendant 19 Magedson would continue to testify without a protective order.” 20 A protective order has since been entered by the Magistrate Judge 21 Walsh. 22 Magedson has already been On June 2, 2010, Magedson was deposed as (Borodkin Decl. In Support of Ex Parte The deposition lasted a full day. (Id. ¶ 24.) Additionally, Plaintiffs suspended the (Id.) (June 24, 2010 Order, Docket No. 82.) In June 2010, Plaintiffs made a motion to compel further 23 deposition testimony from Magedson. 24 motion to compel on June 24, 2010 and established a procedure for the 25 parties to follow regarding Magedson’s deposition. 26 28.) 27 submit a letter to Defendants regarding all of the questions that Magistrate Judge Walsh heard the (Borodkin Decl. ¶ Specifically, Magistrate Judge Walsh required Plaintiffs to 28 46 1 Plaintiffs believed they still needed answers to. 2 Defendants were then ordered to respond to Plaintiffs letter by July 1, 3 2010 indicating their position as to whether such questions had already 4 been answered or were otherwise objectionable. 5 parties were to meet and confer regarding their positions and then set 6 up a telephone conference with Magistrate Judge Walsh during which he 7 would rule as to whether a further deposition was necessary. 8 29.) 9 (Id. ¶ 29.) (Id. ¶ 30.) The (Id. ¶ The parties complied with the procedure set forth by Magistrate 10 Judge Walsh and were able to narrow their disputes down to three topics 11 upon which Plaintiffs contend they need further testimony. 12 of the summary judgment hearing, however, the parties had not yet 13 received a ruling from Magistrate Judge Walsh. 14 which Plaintiffs seek further deposition testimony are: (1) The number 15 of persons enrolled in the CAP Program; 16 uses his cell phone to conduct Xcentric business, and specifically 17 whether he uses his cell phone to discuss enrollment in the CAP Program 18 with third parties; and (3) testimony about whether any positive 19 material is ever posted on the Ripoff Report website other than 20 rebuttals and the introductory comments that Defendants post about CAP 21 members. At the time The three topics upon (2) whether Defendant Magedson 22 Plaintiffs have not offered any explanation as to why this 23 discovery is relevant to Defendants’ summary judgment motion, and the 24 Court can find none. 25 the CAP Program, the only possible relevance of this fact is that, 26 assuming the CAP Program is part of an extortion scheme, the evidence 27 could show the requisite “pattern” of activities under RICO. First, as to the number of persons enrolled in 28 47 Even 1 assuming Plaintiffs can establish a pattern, however, Plaintiffs have 2 not raised a triable issue of fact as to whether they were the targets 3 of any alleged extortion attempts. 4 members of the CAP Program or 200 members, Plaintiffs’ claims 5 nonetheless fail because there is no evidence that Defendants ever 6 communicated any actionable threats to Plaintiffs. 7 v. Bob Stofer Oldsmobile-Cadillac, Inc., 766 F.2d 1147, 1152-53 (7th 8 Cir. 1985) (denying a Rule 56(f) motion seeking discovery as to 9 defendants’ intent where, even had plaintiffs proven defendants’ In other words, whether there are 2 See United States 10 intent, another essential element of their claim would have failed and 11 summary judgment would still be granted in defendants’ favor). 12 this evidence cannot assist Plaintiffs in overcoming summary judgment. Thus, 13 Likewise, whether Magedson used his cell phone to solicit 14 customers for the CAP Program is not relevant to whether Plaintiffs 15 were the victims of extortion. 16 evidence that Magedson ever called Plaintiffs on his cell phone or 17 otherwise. 18 conversations between themselves and Magedson, and therefore would be 19 able to recount the substance of any conversations with Magedson 20 without needing testimony from Magedson. 21 submitted two rounds of declarations regarding their conversations with 22 Magedson and have not presented even a scintilla of evidence of 23 actionable threats. 24 Magedson would help them in that regard. 25 Plaintiffs are attempting to learn about conversations between Magedson 26 and other third parties, those conversations are not relevant to 27 Defendants’ alleged attempts to extort money from Plaintiffs. Plaintiffs have not presented any Further, Plaintiffs would have been parties to any Plaintiffs have already There is no indication that further testimony from 28 48 Finally, to the extent that 1 Lastly, as to the positive information posted on the Ripoff Report 2 website, the Court cannot find any rational relation between this 3 evidence and the current summary judgment motion. 4 already provided testimony about the benefits of the CAP Program, 5 including the positive introduction that is added to the reports about 6 CAP members. 7 information, and under what circumstances, bears no relationship to any 8 alleged threats under California Penal Code § 519. 9 Defendants have Whether Defendants or third parties posted other positive For these reasons, Plaintiffs’ Motion for a Continuance Under Rule 10 56(f) is DENIED. 11 V. 12 DEFENDANTS’ MOTION TO DISMISS In support of their RICO claims, Plaintiffs also alleged in their 13 Complaint that Defendants engaged in predicate acts of wire fraud under 14 18 U.S.C. § 1343.18 15 predicates in their motion for summary judgment; however, Defendants 16 argued in their reply brief that the allegations in the Complaint were 17 manifestly insufficient to state a claim for wire fraud as a predicate 18 act for RICO. 19 Defendants made an oral motion to dismiss the RICO claims based on the 20 predicate acts of wire fraud, arguing that the allegations were 21 patently deficient under Federal Rule of Civil Procedure 9(b). 22 carefully reviewed Plaintiffs’ Complaint, the Court agrees that the 23 pleadings are insufficient to state a claim for RICO violations based 24 on wire fraud. 25 26 27 28 Defendants did not challenge the wire fraud Additionally, at the motion hearing on July 12, 2010, Having The wire fraud statute makes it a crime for any person “having 18 Plaintiffs actually cited the mail fraud statute, 18 U.S.C. § 1341, in their Complaint. However, Plaintiffs make clear in their Opposition (see pg. 12) that they intended to allege claims of wire fraud. Indeed, there is no evidence that the Defendants ever communicated with Plaintiffs through the U.S. Mail; instead, all relevant communications occurred over the Internet. 49 1 devised or intending to devise any scheme or artifice to defraud, or 2 for obtaining money or property by means of false or fraudulent 3 pretenses, representations, or promises” to transmit or cause to be 4 transmitted by means of wire, radio, or television communication in 5 interstate commerce, “any writings, signs, signals, pictures, or sounds 6 for the purposes of executing such scheme or artifice . . .” 7 § 1343. 8 a scheme to defraud, (2) use of interstate wires in furtherance of that 9 fraud, and (3) specific intent to defraud. 18 U.S.C. To state a claim for wire fraud, the Plaintiffs must show: (1) Comwest, Inc. v. American 10 Operator Services, Inc., 765 F. Supp. 1467, 1476 (C.D. Cal. 1991) 11 (citing Sun Savings & Loan Association v. Dierdorff, 825 F.2d 187, 195 12 (9th Cir. 1987)). 13 “Under Ninth Circuit law, RICO claims based on predicate acts of 14 . . . wire fraud must be dismissed where the alleged predicate acts 15 fail to state a claim for violation of the . . . wire fraud statute[].” 16 Id. (citing Alan Neuman Prods., Inc. v. Albright, 862 F.2d 1388, 1392 17 (9th Cir. 1987) (dismissing RICO claims because predicate acts of mail 18 and wire fraud were not plead with specificity as required by Rule 19 9(b)). 20 heightened pleading requirements of Rule 9(b). 21 Condon, No. 08-56832, 2010 WL 1141521, at *1 (9th Cir., Mar. 24, 2010). 22 Thus, to withstand a motion to dismiss, the plaintiff must allege 23 “‘the time, place, and specific content of the false representations as 24 well as the identities of the parties to the misrepresentation.’” 25 Desoto, at *1 (quoting Schreiber Distr. Co. v. Serv-Well Furniture Co., 26 806 F.2d 1393, 1401 (9th Cir. 1986)); Comwest, Inc., 765 F. Supp. at 27 1466. As a species of fraud, claims of wire fraud are subject to the 28 50 Id.; see Desoto v. 1 Plaintiffs’ Complaint woefully fails to meet these requirements. 2 Plaintiffs’ entire Complaint contains a single conclusory allegation 3 regarding the wire fraud predicates, to wit: “The overall scheme and 4 design of the websites as a means to extort money from companies such 5 as Plaintiffs and the fraudulent claims made in furtherance of that 6 scheme constitute violations of 18 U.S.C. § 1341,19 particularly here 7 where all of the communications are made over the Internet.” 8 ¶ 66.) 9 regarding the alleged false representations Defendants made to (Compl. The Complaint does not contain any factual allegations 10 Plaintiffs - including who made the misrepresentations, when and to 11 whom they were made, and what was said - nor does the Complaint allege 12 any facts as to how those misrepresentations (whatever they may be) 13 were part of a scheme to defraud Plaintiffs. 14 Plaintiffs’ Complaint is manifestly insufficient under Federal Rule of 15 Civil Procedure 9(b). For these reasons, 16 As the Court has granted summary judgment in Defendants’ favor as 17 to the alleged predicate acts of extortion, without the predicate acts 18 of wire fraud, Plaintiffs cannot state a claim under RICO. 19 Comwest, Inc., 765 F. Supp. at 1476. 20 dismiss Plaintiffs’ third and fourth causes of action under RICO is 21 GRANTED WITH LEAVE TO AMEND. 22 to amend the Complaint. 23 Complaint so as to re-plead the RICO claims, Plaintiffs shall so notify 24 the Court no later than July 27, 2010. 25 VI. 26 See Thus, Defendants’ motion to Plaintiffs shall have until July 27, 2010 If Plaintiffs do not intend to amend the PLAINTIFFS’ MOTION FOR A BENCH TRIAL On May 31, 2010, Plaintiffs made a motion for a bench trial and to 27 19 28 As stated above, this citation appears to be in error. cite the wire fraud statute, 18 U.S.C. § 1343. 51 Plaintiffs intended to 1 enforce Defendants’ waiver of their right to a jury trial. 2 did not oppose the motion. 3 Court deems Defendants’ failure to oppose the motion as consent to the 4 granting of the motion. 5 Defendants Thus, pursuant to Local Rule 7-12, the Additionally, Defendants have not demanded a jury trial in 6 accordance with Federal Rule of Civil Procedure 38(b). 7 requires that a party serve a written demand for a jury trial (which 8 may be included in a pleading) no later than 14 days after the last 9 pleading directed to the issue is served, or that a party file a demand Rule 38(b) 10 with the Court in accordance with Rule 5(d). 11 either of these steps. 12 state court, see Fed. R. Civ. Proc. 81(c)(3)(A), Defendants have also 13 waived their right to a jury trial under state law. 14 provides that a litigant waives a jury trial by failing to announce 15 that a jury is required at the time the case is first set for trial. 16 Cal. Code Civ. Proc. § 631(d). 17 the initial case status conference on April 19, 2010. 18 not demand a jury trial at that time. 19 jury trial has been waived. 20 Defendants did not take Further, although this case was removed from California law The Court set the matter for trial at Defendants did Thus, Defendants’ right to a For these reasons, Plaintiffs’ Motion for a Bench Trial is 21 GRANTED. 22 VII. CONCLUSION 23 For the reasons stated above, the Court rules as follows: 24 Defendants’ Motion for Summary Judgment is GRANTED IN PART as to 25 Plaintiffs’ third and fourth causes of action under RICO to the extent 26 those claims are based on the alleged predicate acts of extortion or 27 attempted extortion. Defendants’ Motion for Summary Judgment is DENIED 28 52 1 as to Plaintiffs’ remaining claims arising under state law and as to 2 Plaintiffs’ alleged damages. 3 Defendants asserting such arguments in a future summary judgment motion 4 when those claims are properly before the Court. 5 6 The denial is without prejudice to Plaintiffs’ Ex Parte Request for a Continuance of the Defendants’ Summary Judgment Motion is DENIED. 7 Defendants’ Motion to Dismiss Plaintiffs’ third and fourth causes 8 of action under RICO for failing to plead the alleged predicate acts of 9 wire fraud with particularity is GRANTED WITH LEAVE TO AMEND. 10 Plaintiffs shall file any amended complaint no later than July 27, 11 2010. 12 to file a motion to dismiss the amended complaint, if they believe such 13 a motion is warranted. Thereafter, Defendants are granted until Friday, August 6, 2010 14 Plaintiffs’ Motion for a Bench Trial is GRANTED. 15 The case remains bifurcated as to the RICO claims only. If 16 Plaintiffs decide to amend the complaint so as to re-plead the 17 predicate acts of wire fraud, the Court will revisit the issue of 18 further discovery (including the continued deposition of Magedson) 19 after any motions to dismiss are resolved or the time for filing such 20 motions has expired. 21 IT IS SO ORDERED. 22 23 24 DATED: 07/19/10 25 STEPHEN V. WILSON 26 UNITED STATES DISTRICT JUDGE 27 28 53

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